Franklin Templeton offers Africa growth fund to UK investors

By: James Norris | 24 Apr 2012

Franklin Templeton is to launch a sterling share class for UK investors for its new Templeton Africa strategy in May, subject to FSA registration.

Franklin Templeton Investments has received verbal approval from the CSSF, the Luxembourg regulator, to launch the Templeton Africa Fund, a sub-fund of its Luxembourg-registered Sicav range, Franklin Templeton Investment Funds (FTIF).

Africa is poised to benefit from resources and growth of new middle class, says Templeton Emerging Markets Group. The new Templeton Africa Fund seeks long-term capital growth by investing in equity securities in African countries or in companies based elsewhere but who have their principal business activities in Africa. The investment team offers investors a diversified portfolio of companies across countries and sectors with exposure to secular growth trends on the African continent.

Mark Mobius, executive chairman, Templeton Emerging Markets Group and lead portfolio manager of the Fund, said: “We believe that Africa’s markets present significant opportunities for development due to a combination of strong economic growth, rising demand for the region’s vast natural resources, and a growing consumer market.”

Africa is expected to grow more than 7% annually in the next 20 years, he said. This is due to “an improving investment environment, better economic management and developed as well as emerging markets rising demand for the continent’s resources, all of which offers a compelling proposition to global investors.”

The Templeton Emerging Markets Group believes that Africa is ideally positioned for the strong growth rates the continent offers, but also for its wealth of natural resources and the impact of a rising emerging middle class. Mobius continued: “Africa has impressive stores of resources, not only in minerals but also in agriculture — 60% of the world’s uncultivated arable land is found in Africa.”

He added: “Demographically, Africa’s growth should benefit from a relatively young population with rising purchasing power. The median age of the African population is 20, compared to 40 for the developed world, and it is estimated that in 10 years, the number of African households earning more than $5,000 will jump from 85 to 128 million.”